It has been frustrating for stockholders of gold mining companies. As the price of gold has levitated past $1900/oz, mining stocks are languishing at levels seen when gold traded at $600/oz. Over the last five years, the “better” investment has been physical gold as opposed to gold stocks.
Gold stock investors are always looking for clues that the bull market in gold stocks is about to catch up with the bull market in the price of gold.
For the first time in many months, a mining analyst actually upped the forecast for the price of gold. Despite the fact that gold trades at $1900/oz most analysts have 2013 price targets of $1200. Obviously most brokerages and banks believe that the price of gold is set for a large decline over the next few years. Despite the gold bull market being in it’s eleventh year, the financial community is largely composed of non-believers. They are still conditioned that gold is barbaric relic rather than an alternative currency.
Yesterday, a Citigroup analyst upped his gold price target for 2013 up to $1500 which was a 25% increase. The analyst also upgraded the stock of Newmont Gold.
It is significant that brokerages are starting to realize that high gold prices may be perpetual. Of course there will be wild swings and volatility but if the price of gold indeed backs paper currencies, the price of gold should remain elevated.
Disclosure: Long NEM